Have Republicans and Democrats used the newly-found bipartisanship forged in anger over Barack Obama’s arrogant treatment of Congress on Libya to reach a deal on the FY2011 budget?  Reuters hears whispers around the campfire that both sides may move towards a compromise that will finally end the six-month-plus wait for a federal spending plan for the current fiscal year:

Republicans and President Barack Obama’s Democrats, facing huge economic stakes, may soon reach a budget deal for this fiscal year after weeks of half measures to avert a government shutdown.

Worried about the fragile U.S. recovery and their own political well-being, members on both sides seem willing to resolve a gap between them on how much needs to be cut from federal spending this fiscal year to rein in the budget deficit.

“Chances of a deal seem reasonably good,” a senior congressional aide said, adding that talks may deepen when they move from staff level to the involvement of party leadership in the Senate and House of Representatives as early as next week.

A GOP aide says that a deal is in “everyone’s interest,” referring to the political danger in a government shutdown.  That danger exists more for Democrats rather than Republicans.  After all, Democrats had all of 2010 to pass the FY2011 budget, including the lame-duck session’s omnibus.  They larded it down with so much pork that they couldn’t even count on their own caucus to support it.

However, Republicans have their own reasons to get this finished quickly as well:

The aide said at least some House Republicans may back off demands for deeper cuts this year after House Budget Committee Chairman Paul Ryan unveils plans next week for additional reductions in fiscal 2012.

Republicans have already cut $10 billion in five weeks, more than Democrats were willing to go for the rest of the whole year last month.  If they can get more cuts in a final package, they can declare victory and move forward with the next budget cycle.  Otherwise, a series of CRs will tie up progress on the next budget.

And that’s where the real money will be.  Even the $100 billion in discretionary spending cuts demanded by conservatives from the FY2011 are mostly a token of commitment, not a real solution to government overspending.  In order to eliminate a $1.6 trillion deficit, Congress has to restructure entitlement spending, which Ryan has pledged to pursue.  That will mean statutory changes apart from the budget process, and it will force Democrats to either come to the table or watch Republicans blame them for obstructionism in addressing the serious fiscal crisis facing the US.

The quicker we get to that debate, the better.